A friend asked what’s the best thing he could do for his employees.
“What are you doing for them currently?” I replied. He said he subsidises their housing by part-paying their rent and pay? for their children’s education.”What else?” I asked, to which he added, he gives them a loan whenever they want money.
I said the greatest thing that a finance person like you can do is to Impart Financial health, and knowledge to them. Whenever they come to you for a loan just direct them to a bank. This way it will be ensured that they buy a good property - the papers would be vetted. I said by encouraging them to go to the bank and dealing with them, they will know the REAL purpose of a bank.
Once they take a loan to buy a cow, motorcycle or home, they will get the good habit of repaying regularly. Tell them that they should borrow only to earn an income - buy a cow to sell milk, buy a car to drive as a taxi. However, if he/she asks for a loan to buy a fancy mobile for his son/daughter/wife, it has to be a No. Hand-me-down mobiles, second-hand mobiles should work. So borrow for investing, but no borrowing for spending. It is not uncommon to see loans of almost `1 Million for a marriage! When I saw it for the first time, I was stumped.
Teach them basic Personal finance - ask them to do a sip in a Multi-Asset fund over say 20 years. Teach them to open and operate a savings bank account. Use these assets and open a Varisht Vima Yojana or a Pradhan mantri Arogya Yojana - a pension scheme or a Term Life insurance. Make sure that his/her name in all the documents are in synch with the Pan card and Aadhar number.
Make sure that they understand what offers like “zero interest” mean. Telling them the importance of keeping their house papers in place, making regular payment, Cibil score, understanding banking, interest rates, PPF or Mutual fund SIP..it is our job.
Like we teach our children (ok, like we should teach our children), we should teach the people working with us. It is very difficult to believe that the employees of mutual funds are not taught this by their Employees. Very tough to believe, but absolutely true.
Instead of blaming the government that they are doing nothing - the BFSI - banks, life insurance companies, asset management companies, regulators, stock and commodity exchanges, etc. one should start their own investment clubs and encourage Investment Awareness Programs.
So as a person who is well off (privileged) - the best thing you can do is Vidya daan - the donating of Education. Teaching - especially finance - to the people at the bottom of the pyramid is one of the noblest and perhaps one of the best things you can do.
All of us can do this and we will have a lot of thankful souls around us.
PV subramanyam
writes at www.subramoney.com and has authored the best seller ‘Retire Rich - Invest C 40 a day’